Accounting for Job Order Costing

1.  Direct Labor 

Dr W.I.P. Control Account

Cr Cash Account

2.  Accrued Direct Wages

Dr W.I.P. Control Account

Cr Wages Control Account

Indirect Wages

 Dr Factory overheads control Account

Cr Wages Control Account

3. Production Overheads 

 (i) (Not still paid) 

Dr Factory overhead control Account

Cr Expenses or Creditor control   Account

  (ii) (While paid)

Dr Expense or creditors Account

Cr Cash Account

Note

 Overheads entries apply while there is an interlocking accounting system.

4.  Finished goods transferred to the store: 

Dr Finished goods stock control Account

 Cr W.I.P Control Account

5.  Sale delivery of finished goods to customers:

(i) On Credit:  Dr Debtors control Account Cr Sales Account

(ii) In Cash:  Dr Bank or Cash Account Cr Sales Account

6.  Cost of goods sold to customers: 

Dr   Cost of sales Account

Cr   Finished goods control Account

7.  (i)  While there is over absorption of production overheads as:

Dr Factory overheads control Account

 Cr P & L Account

(ii)  While there is under absorption of production overheads as:

Dr P and L Account

Cr Factory overheads    control Account

8.  When there are non-manufacturing overheads:

Dr P and L Account

Cr   Non-manufacturing overheads control Account or nonmanufacturing overheads or else expenses are considered like period costs and are consequently not changed To W.I.P control Account.

Job Cost Account